Elon Musk wowed millions of people who watched the livestream of a flawless first launch of SpaceX’s Falcon Heavy rocket, which carried a Tesla roadster into space, capped by the elegant, simultaneous landing of two boosters. Musk’s euphoria was undiminished as he shifted gears on Wednesday to Tesla, pointing to a silver lining for the high-flying carmaker that capped a year of big losses and production headaches for its critical Model 3 sedan.

The company reported a whopping $675.4 million net loss for the final quarter of 2017 and a $1.96 billion deficit for the year, the most ever on both counts. Loss per share was $4.01 on a GAAP basis, or $3.04 per share excluding some items. That was better than consensus estimates for adjusted EPS losses of $3.10 to $3.19, and likely the result of bigger than expected sales of emissions credits. Tesla shares plunged 8.6% to $315.23 on Thursday.

Musk and Tesla CFO Deepak Ahuja acknowledged 2017’s challenges in a letter to investors but also said the table was set for a much better year in 2018. Notably, they predict operating income will become “sustainably positive” at some point this year and that production of Model 3, as well as the S and X crossover, will continue to grow.

“2018 will be a transformative year for Tesla, with a high level of operational scaling,” the two said. “As we ramp production of both Model 3 and our energy products while keeping tight control of operating expenses, our quarterly operating income should turn sustainably positive at some point in 2018.”

The company stuck with its production guidance for the Model 3, nominally priced from $35,000, to reach 2,500 units a week by the end of the first quarter, and then 5,000 a week at the end of the second quarter. The Palo Alto, California-based company didn’t say when it will hit its ultimate target of 10,000 Model 3s a week, enough to hit Musk’s goal of 500,000 a year.

“Even this Tesla realist and Model 3 deposit holder has doubts about Tesla ramping up to 10,000 units/week, essentially promising production levels of over 250,000 units in 2018,” said Rebecca Lindland, executive analyst at Kelley Blue Book’s KBB.com. “I think they’ll be lucky to get 150,000 units out the door in 2018, and even that would be an incredibly impressive feat, requiring an average weekly rate of over 3,000 units for every single week left in 2018 with no breaks. Elon Musk needs a team of forecasters that he’ll listen to so he can finally provide Wall Street and depositors with achievable targets.”

Last month, Tesla cut its Model 3 production target for a second time after building just 2,425 in the fourth quarter. Total production, including the higher-priced Model S and Model X, was 101,027 units in 2017.

“There are never any guarantees, but Elon Musk hasn’t been shy about cutting back forecasts in recent months so he certainly would have pulled back on the reins if Tesla wasn’t confident,” Reeves told Forbes. The company also managed to burn far less cash in the fourth quarter, trimming it to $276.8 million in the quarter, compared with $1.42 billion in the third quarter and $969.8 million a year ago, he said.

“It’s always about growth with Tesla, not the bottom line,” Reeves said. “But it’s also encouraging to see a smaller-than-expected loss and a cash burn that dropped significantly from Q3 to Q4.”

Tesla’s sales of zero-emission vehicle, or ZEV, credits to other automakers that need them to comply with California’s tough emissions rules, were up significantly from a year earlier, to $179 million compared with $20 million in the final quarter of 2016. Barclays analyst Brian Johnson predicted $10 million for the quarter. Exceeding the forecast provided Tesla an adjusted net loss that was slightly better than expected.

Tesla completed the integration of SolarCity into its operations in 2017 and aims to significantly boost shipments of solar panels and power storage units this year.

“We expect energy storage products to experience significant growth, with our aim to at least triple our sales this year,” Musk and Ahuja said. “We expect energy generation and storage gross margin to improve significantly in 2018 as we enter the year with a backlog of higher-margin commercial solar projects and a more profitable energy storage business due to manufacturing efficiencies from scaling.”

Capital expenditures will continue to rise in 2018, to expand output at the Gigafactory battery plant in Nevada and continued investment in production capacity at Tesla’s Fremont, California, plant, the company said. Tesla will also start investing this year to add production of the Model Y, a small electric crossover that will be the next vehicle in its lineup.

“We are going, as you suspect, to need to make some capital investments in the second half of this year, in late Q3, Q4, for Model Y. We want to wait probably three to six months before announcing any definitive plans on production location or details associated with that,” Musk said in a conference call with analysts.

His expectations for Model Y, which hasn’t yet been unveiled, are enormous.

“To give you some flavor for optimism for Model Y… we might aim for something like maybe capacity of a million units a year, just for Model Y alone. I think we’ll be able to do that for capex that is less than Model 3 capex at the half-million-unit level”, Musk said.

Notably, customer deposits for Model 3, as well as the recently announced Semi and Roadster became a major balance sheet item for Tesla, totaling $858 million at the end of 2017, up from $663 million a year earlier. While most of those funds are from the nearly half-million reservations Tesla has for the Model 3, a growing portion comes from the battery-powered Class 8 truck and high-end sports car.

Separately, Musk said that Jon McNeill, who had been head of the company’s sales and service group, had left the company. Musk said he’ll oversee those functions himself. Lyft said it hired McNeil as its chief operating officer.

“Jon is a world-class leader who brings deep experience as a highly successful entrepreneur and executive,” Lyft CEO Logan Green said in an emailed statement. “Last year, the Lyft community experienced more growth than in all previous years combined, growing rides by 2.3x and increasing market share by more than 50%. Jon is the right leader to build upon this momentum with his unique background of starting companies from scratch and managing at scale.” – Written by Alan Ohnsman, FORBES STAFF